The Future of ICOs

For private companies, raising capital traditionally hinges on a major liquidity event—like a public offering, acquisition, or merger. These events allow early investors to recoup their returns and bring in fresh funds, but the process is fraught with challenges. Not only are there regulatory obstacles, but companies must also navigate the complexities of negotiations, valuation assessments, and timing. Tokenising equity, however, could offer a revolutionary alternative by enabling companies to tap into liquidity without a traditional exit event.

Imagine a world where private companies can offer investors immediate liquidity through tokenised equity, transforming an illiquid asset into a tradable one and providing unprecedented access for new investors. This model has the potential to bring about radical change in how private equity operates.

Unlocking Liquidity for Early Investors and New Entrants

Tokenised equity would allow early investors to sell their vested holdings on a secondary market, recouping some of their initial risk without waiting for a distant IPO or acquisition. By providing an opportunity to take some capital off the table, tokenised equity offers existing investors flexibility while welcoming new capital into the ecosystem. This structure could lead to fairer price discovery through market-driven dynamics, enabling companies to grow their valuations more organically.

For companies, this secondary market offers more than just a new investor base; it provides real-time insights into market sentiment and value. Unlike traditional fundraising circuits, where networking and pitch presentations are paramount, tokenised equity would enable companies to reach a wider, potentially global audience of smaller investors.

Expanding Accessibility to Private Investment

One of the most compelling benefits of tokenised equity is increased accessibility. Today, private investment typically involves high minimum ticket sizes—often $10,000 or more—which limits participation to those with significant capital. By tokenising equity, companies can offer “fractional ownership,” allowing investors to buy in at smaller amounts, reducing their exposure while providing opportunities for more people to invest.

Additionally, tokenisation could democratise private investment. Instead of requiring extensive networks or access to exclusive investment opportunities, tokenised equity would allow investors to participate more freely, potentially revolutionising who can access early-stage investments.

Balancing Benefits and Risks in the Tokenised Equity Market

Of course, tokenised equity presents both opportunities and challenges. A secondary market brings with it the possibility of volatility. Companies may find that tokenised equity introduces price instability, as early investors may sell off their tokens, impacting the perceived value of the company. On the other hand, the exposure to an active market could drive demand, potentially increasing the token’s value and, by extension, the company’s market cap.

To maintain stability, companies would need to focus on creating real value and growth through their operations, much like they would in traditional markets. At Tokenise, we believe that well-structured tokenomics and continued innovation are essential for a tokenised equity market to succeed.

Tokenise: Bridging the Gap to Digital IPOs

Tokenise is at the forefront of this shift, developing tools that make it as straightforward as possible for private companies to tokenise their equity. Our platform offers an end-to-end solution: from tokenisation and market launch to ongoing management and support. Our goal is to enable companies to enter the digital market through a “digital IPO” or tokenised ICO, bringing the accessibility and flexibility of tokenisation to private equity.

Our tooling provides companies with the ability to structure their tokens for stability and shareholder appeal. We help companies create responsible, well-designed token models that balance market dynamics with the company’s long-term growth strategy. By partnering with Tokenise, companies gain access to a comprehensive framework for tokenisation that supports not only the technical aspects but also market entry and investor engagement.

Case in Point: Quadrant Biosciences’ Tokenised Equity

A pioneering example of this model is U.S.-based Quadrant Biosciences Inc., a biotechnology company that tokenised its equity as “Quadrant Token.” Offering 17% of its diluted equity in a token sale, Quadrant raised over $13 million. Quadrant’s token, residing on its native blockchain, represents traditional equity and demonstrates the feasibility of tokenising company shares to create value in a new, liquid format. This example underscores the potential of tokenisation to reshape capital-raising opportunities for companies outside the public markets.

A Future Where Digital Assets Stand Beside Traditional Equities

Looking ahead, tokenised assets have the potential to reshape not just private equity but the financial landscape as a whole. As these assets grow in prominence, traditional markets may be compelled to acknowledge and integrate them as a legitimate asset class. Today’s crypto markets are often volatile and speculative, making them unattractive to institutional and retail investors alike. However, as private companies with strong business models and revenue streams begin to offer tokenised equity, digital assets could emerge as a stable and valuable component of diversified investment portfolios.

At Tokenise, we see a future where digital assets provide investors with diverse, secure, and regulated options. Tokenised equity could become a pillar of the next-generation financial ecosystem, bridging the gap between traditional and digital markets, and empowering private companies to harness liquidity on their own terms.

Conclusion

Tokenising private equity isn’t just a new way to raise capital; it’s a transformative approach that could redefine the structure of private investment. By offering liquidity, accessibility, and flexibility, tokenised equity has the potential to revolutionise how companies and investors interact in the private market. Through Tokenise’s tools and services, we aim to bring this future closer to reality, helping companies tap into new forms of liquidity, reach a broader audience, and build sustainable, growth-oriented markets for their assets.